Free trade Malaysian style

The Japan­ese press is report­ing a hic­cup in the pro­posed Japan-Malaysia ‘free trade agree­ment’. bq. Malaysia cut trade tar­iffs on car parts in Jan­u­ary based on Asso­ci­a­tion of South­east Asian Nations (ASEAN) rules. But it hiked the com­mod­i­ty tax on import­ed cars and local­ly made for­eign vehi­cles, leav­ing domes­tic man­u­fac­tur­ers in a high­ly advan­ta­geous posi­tion. (“Manichi Dai­ly News”:http://mdn.mainichi.co.jp/news/20040718p2a00m0fp012000c.html) It’s been clear for some time that Malaysia’s ASEAN trad­ing part­ners are less than amused by these shenan­ni­gans. The Japan­ese stand on this issue, how­ev­er, was not always quite as straight­for­ward as it seems. For many years Malaysia’s nation­al auto man­u­fac­tur­er (Pro­ton) was engaged in a part­ner­ship with the the strug­gling Japan­ese man­u­fac­tur­er, Mit­subishi, who pre­sum­ably prof­it­ed from the pro­tec­tion. The new own­ers of Mit­subishi (Daim­ler-Chrysler) “got out”:http://www.aiada.org/article.asp?id=4700 of the part­ner­ship with Pro­ton ear­li­er this year. The mar­ket for import­ed vehi­cles in Malaysia is dom­i­nat­ed by Japan­ese and Kore­an man­u­fac­tur­ers who have “reportedly”:http://www.sandsmuseum.com/cars/elise/information/press/press/press2004/protonsell.html won a half share of demand despite the high pro­tec­tion for the local prod­uct. For­mer PM, Mahatir Mohammed is now a con­sul­tant to the Malaysian Pro­ton car com­pa­ny; he is said to be demand­ing anoth­er 20 years of ‘infant indus­try’ pro­tec­tion for the nation­al car mak­er.

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher